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What GAO Found
In the United States, four light water small modular reactors (SMRs)—nuclear power reactors with a generating capacity of less than 300 MW of electricity—have been developed to the point that the reactor designers have begun discussing design certification and license applications with the Nuclear Regulatory Commission (NRC), and one SMR designer has established time-frames for applications to NRC and construction of a power plant. The Department of Energy (DOE) has provided financial support to the designers of two SMRs for reactor certification and licensing work. DOE supports the SMR design by NuScale through a cost-sharing agreement in which DOE will pay as much as half of NuScale's costs— up to $217 million over 5 years—for certifying the design. The SMR design by mPower has a similar cost-sharing agreement with DOE, but DOE is no longer providing funds because mPower has scaled back its efforts while it looks for additional investors. NuScale expects to submit a design certification application to NRC in late 2016, with its first power plant beginning operation as early as 2023. Other SMR designers do not yet have established time frames for such applications. DOE also supports research and development (R&amp;D) activities on advanced reactor concepts that focus on the high temperature gas reactor and the sodium fast reactor. DOE provides this support in areas such as fuels and material qualification and reactor safety studies. DOE and NRC officials do not expect applications for advanced reactors for at least 5 years.
According to DOE officials and reactor designers, both SMRs and advanced reactors are intended to provide benefits that could facilitate the use of nuclear reactors in new markets or commercial applications. SMR designers plan to decrease the overall cost and time for reactor construction compared with existing large light water reactors (LWRs), without significantly increasing ongoing operational costs. They told GAO they expect that the smaller size of SMRs may expand the locations where a nuclear power plant could be constructed. For example, they may be used in remote or rural areas that have lower electricity demands or smaller distribution systems. DOE officials and reactor designers expect advanced reactors to operate at higher temperatures and therefore they could generate electricity more efficiently. Furthermore, they told GAO heat from these higher temperature reactors could be used directly in certain industrial processes that currently depend on fossil fuels. Some advanced reactors may also allow for improved spent nuclear fuel recycling and management.
DOE officials and SMR and advanced reactor designers told GAO they face challenges in developing and deploying these reactors. SMR designers face technical challenges in demonstrating economic feasibility and safety without increasing reactor complexity, and advanced reactor designers face greater technical challenges because advanced reactors differ more from current reactors than SMRs. Reactor designers told GAO they face challenges associated with the up to $1 billion to $2 billion cost of developing and certifying a design. Even with a reactor design ready to submit to NRC, the licensing and construction can take nearly a decade or more before a reactor is operational. DOE officials, members of GAO's expert group, and reactor designers said that the cost and time needed to certify or license a reactor design and construct it, along with uncertainty about the energy market in the future and potential customer interest, create obstacles to the development and deployment of new reactors.
Why GAO Did This Study
Energy demand in the United States is expected to continue to grow over the coming decades, and DOE considers nuclear energy to be one way to help meet this increased demand without producing air pollution. However, the current domestic commercial nuclear reactor fleet, consisting of 99 large LWRs that provide about 20 percent of U.S. electricity, is aging, and some reactors have shut down in recent years. LWRs use light, or ordinary, water to cool the reactor. New reactor concepts are under development as alternative energy options. Light water SMRs have some similarities, including the coolant used, to the existing large LWRs, and advanced reactors differ more from the large LWRs. Both new reactor concepts differ from the existing large LWRs in potential applications.
GAO was asked to conduct a technology assessment of these new reactor concepts in the United States. This report discusses (1) the status of light water SMR and advanced reactor concepts under development; (2) the intended benefits of these new reactor concepts; and (3) the challenges associated with developing and deploying these new types of reactors. GAO reviewed documents from DOE and NRC, and interviewed DOE and NRC staff as well as industry representatives involved in developing reactors. GAO, with the assistance of the National Academies, convened a meeting with a group of 20 experts on nuclear reactor development and related issues to provide additional information.
For more information, contact Chief Scientist Timothy M. Persons at (202) 512-6522 or personst@gao.gov or Frank Rusco at (202) 512-3841 or ruscof@gao.gov.Tue, 28 Jul 2015 13:00:00 -0400Letter ReportIRS 2016 Budget: IRS Is Scaling Back Activities and Using Budget Flexibilities to Absorb Funding Cuts, June 24, 2015http://www.gao.gov/products/GAO-15-624
What GAO Found
Business unit trends. Internal Revenue Service (IRS) total appropriations declined from a high of $12.1 billion in fiscal year 2010 to $11.3 billion in fiscal year 2014, a reduction of about 7 percent. GAO selected business units with large declines in obligations—both dollar amount and percent—from fiscal year 2010 to fiscal year 2014, the most current spending data available. To absorb budget cuts, the business units GAO reviewed—Human Capital Office, Office of Chief Counsel, and Small Business/Self-Employed Division—each reduced staff (full-time equivalents or FTEs) by 16 to 30 percent. According to officials, they also prioritized legally required programs, such as tax litigation, and reduced some programs or services, such as limiting non-filer investigations, postponing software acquisitions, and delaying approximately 24,000 employee background reinvestigations. Such scaled back activities potentially reduce program effectiveness or increase risk to IRS and the federal government.
Change in Full-Time Equivalents at Selected Business Units, Fiscal Years 2010-2014
Business unit
Fiscal year 2014 FTEs
Change in FTEs from fiscal year 2010 to 2014
Percent change in FTEs from fiscal year 2010 to 2014
Human Capital Office
1,205
-506
-29.6%
Office of Chief Counsel
2,101
-402
-16.1%
Small Business/Self-Employed
21,681
-5,417
-20.0%
Source: GAO analysis of IRS data. | GAO-15-624
Budget environment. IRS's budget decreased by an additional $346 million from fiscal year 2014 to fiscal year 2015. IRS used its flexibility to absorb this reduction by allocating user fee revenue, which comprised 3.4 percent of its budget, or $416 million, in fiscal year 2014. Additionally, to increase agency-wide coordination of budget decisions, IRS formed a new office and committee to inform budget formulation and execution decisions.
Information technology data. IRS requested $3.2 billion for information technology (IT) investments. This accounted for 23 percent of IRS's budget request for fiscal year 2016. However, IRS provided inaccurate data on actual obligations to date for major IT investments in its congressional justification (CJ) for fiscal year 2016. As a result, Congress does not have accurate, reliable, and complete data on IT investments to inform its budget decisions or aid in its oversight. Additionally, IRS did not use standard definitions for “life-cycle cost” and “projected useful life of the current asset” or explain the terms in a way that could be understood and used.
Open GAO recommendations. Eighty-eight recommendations and eight matters for congressional consideration could have financial implications if implemented. IRS made progress implementing many recommendations, including two particularly important ones. First, IRS has begun to estimate return on investment for specific compliance projects within its correspondence exam program. Second, IRS's updated cost estimate for the Patient Protection and Affordable Care Act improved from previous versions and met or substantially met the criteria in three of four overall categories, but is still not reliable because it only partially met the criteria in the overall credibility category.
Why GAO Did This Study
The financing of the federal government depends largely upon IRS's ability to collect taxes, including providing taxpayer services that make voluntary compliance easier and enforcing tax laws to ensure compliance with tax responsibilities. For fiscal year 2016, the President requested $12.9 billion in appropriations for IRS; the request is almost $2 billion (18 percent) more than IRS's fiscal year 2015 appropriation.
Because of the size of IRS's budget and the importance of its service and compliance programs for all taxpayers, GAO was asked to review the fiscal year 2016 budget request for IRS and the effects of recent budget constraints. In February 2015, GAO reported interim information on IRS's budget. This report (1) analyzes select IRS business units' budget and staffing; (2) describes how IRS is managing in a constrained budget environment; (3) assesses key data for IT investments; and (4) describes IRS progress in implementing selected GAO open recommendations. To conduct this work, GAO reviewed the fiscal year 2016 CJ, IRS and Office of Management and Budget guidance, and IRS data from fiscal years 2010 to 2014, and interviewed IRS officials.
What GAO Recommends
GAO recommends that IRS implement controls to ensure that information reported on major IT investments is accurate, define key terms in the CJ, and continue implementing previous recommendations. IRS agreed with the recommendations.
For more information, contact James R. McTigue, Jr. at (202) 512-9110 or mctiguej@gao.gov.Fri, 24 Jul 2015 13:00:00 -0400Letter ReportNavy Working Capital Fund: Budgeting for Carryover at Fleet Readiness Centers Could Be Improved, June 30, 2015http://www.gao.gov/products/GAO-15-462
What GAO Found
GAO's analysis of Navy Working Capital Fund Fleet Readiness Centers' (FRC) budgets found that actual adjusted carryover exceeded allowable carryover in 10 of 11 fiscal years reviewed because orders exceeded work performed (revenue) by more than expected. As a result, total carryover grew to about $1 billion at the end of fiscal year 2014. In fiscal year 2014, the FRCs' actual adjusted carryover amount was under the allowable amount because the FRCs received a new waiver that reduced the adjusted carryover below the allowable amount. The FRCs did not present the purpose and amount of the waiver in their budget to Congress. Having complete information in the budget is needed to help policymakers make informed decisions.
Fleet Readiness Centers' New Orders, Revenue, Total Carryover, and Months of Carryover
The FRCs budgeted the carryover amount to be under the allowable amount in 10 out of the 11 fiscal years GAO reviewed. In fiscal year 2004, the budgeted amount was greater than the allowable amount by $40 million. In 10 of the 11 years, the actual carryover information was greater than the budgeted carryover information by a low of $30 million in fiscal year 2010 to a high of $285 million in fiscal year 2007. According to Navy officials, these differences can be attributed to uncertainty in overseas contingency operations orders or changing customer requirements after budget preparations. Although the Navy has efforts ongoing to address these two issues in the future, GAO found that the Navy's guidance does not require trend analysis. Such analysis could help ensure more accurate estimates.
GAO identified four key drivers for large FRC carryover balances in fiscal years 2013 and 2014: (1) orders for work scheduled to begin in the fourth quarter carried over into the next fiscal year; (2) work on F/A-18 Hornet aircraft required structural repair and the FRCs had limited engineers and artisans, support equipment, and facilities to perform the work; (3) work on crash-damaged aircraft was difficult to predict and required nonstandard repairs that necessitated long lead time for parts to perform the work; and (4) the unavailability of parts to perform work. The Navy is taking several actions, such as hiring engineers and artisans to perform F/A-18 Hornet work.
Why GAO Did This Study
Three Navy FRCs support combat readiness by providing repair services to keep Navy units operating worldwide. To the extent that the FRCs do not complete work ordered and funded by year-end, the work and related funding will be carried over into the next fiscal year. The Department of Defense (DOD) established a formula based on new orders received from customers for determining the allowable carryover amount at year-end as defined by the DOD Financial Management Regulation. As requested, GAO reviewed issues related to FRC carryover.
GAO's objectives were to determine (1) the extent to which the FRCs' actual carryover differed from the allowable amounts and the reasons for any differences, (2) the extent to which the FRCs' reported budget information on carryover differed from reported actual information and the reasons for any differences, and (3) the key drivers for orders with large carryover balances for fiscal years 2013 and 2014 and the actions the FRCs are taking or planning to take to reduce carryover. GAO reviewed carryover guidance, analyzed carryover and related data for the FRCs for fiscal years 2004 to 2014, and interviewed Navy officials.
What GAO Recommends
GAO recommends that DOD improve the budgeting for carryover by reporting the purpose and amount of waivers in FRC budgets and augmenting Navy guidance to include trend data on actual orders in developing budget estimates. DOD concurred with GAO's recommendations and cited related actions planned or under way.
For more information, contact Asif A. Khan at (202) 512-9869 or khana@gao.gov.Tue, 30 Jun 2015 13:00:00 -0400Letter ReportDOD Operational Testing: Oversight Has Resulted in Few Significant Disputes and Limited Program Cost and Schedule Increases, June 02, 2015http://www.gao.gov/products/GAO-15-503
What GAO Found
The Director, Operational Test and Evaluation (DOT&amp;E) provided oversight for 454 Department of Defense (DOD) acquisition programs from fiscal years 2010-2014. Military service officials identified 42 programs from that period that they believed had significant disputes with DOT&amp;E over operational testing—that is, disputes that may have led to cost and schedule impacts for programs. Operational testing is intended to evaluate a system's capability in realistic combat conditions before full-rate production or full deployment. Acquisition programs and DOT&amp;E have different objectives and incentives, which can potentially fuel tension between the two over what is needed to accomplish operational testing for programs. According to military service officials, the tension is generally manageable and differences usually are resolved in a reasonable and timely manner, with modest adjustments often required in the course of developing and executing a test approach. However, sometimes differences about operational testing requirements, methods, costs, or results develop into significant disputes and are more difficult to resolve. Acquisition and test officials from the military services identified only a limited number of cases—less than 10 percent of programs receiving DOT&amp;E operational test oversight since fiscal year 2010—that they believed had experienced significant operational testing disputes with DOT&amp;E. Officials noted that although these disputes can require additional time and effort to work through, they generally get resolved.
In an in-depth review of 10 case studies selected from among the 42 programs with significant disputes, GAO identified a variety of factors that contributed to disputes between the acquisition programs and DOT&amp;E, but only a few cases that involved considerable cost or schedule impacts. Key factors involved the adequacy of proposed testing and differences over test requirements, assets, and the reporting of test results. In general, GAO found that DOT&amp;E had valid and substantive concerns about operational test and evaluation for each of the 10 cases reviewed. However, military service officials indicated to GAO that testing advocated by DOT&amp;E was, in some instances, beyond what they believed was necessary and lacked consideration for programs' test resource limitations. Many of the disputes GAO reviewed were, or are expected to be, resolved in DOT&amp;E's favor with limited cost and schedule impacts to the programs. In a few cases, military service officials acknowledged that benefits were achieved from resolving the disputes, such as a reduction in the scope of operational testing and better understanding of system requirements. Resolution of disputes for three programs—DDG-51 Flight III Destroyer, F-35 Joint Strike Fighter, and CVN 78 aircraft carrier—had considerable potential or realized cost or schedule effects and required formal involvement from senior DOD leadership. For the first two programs, hundreds of millions of dollars in additional costs were associated with resolving their disputes. For CVN 78, the dispute—which remains unresolved— involves the Navy's carrier deployment schedule and whether survivability testing will be deferred by several years. For the other seven case study programs that GAO reviewed, the cost and schedule effects tied to dispute resolution were more limited, and in some instances, not related to operational testing requirements.
Why GAO Did This Study
DOD conducts extensive operational testing and evaluation of its military systems prior to full-rate production and fielding. DOT&amp;E plays an integral role in operational test and evaluation by issuing policy and procedures, overseeing operational test planning, and independently evaluating and reporting test results. At times, DOT&amp;E and acquisition programs may disagree about what is needed to adequately demonstrate operational capability, which sometimes may affect programs' cost or schedule.
The Joint Explanatory Statement to Accompany the National Defense Authorization Act for Fiscal Year 2015 directed GAO to review DOT&amp;E's oversight activities. This report examines (1) the extent to which DOD acquisition programs have had significant disputes, if any, with DOT&amp;E over operational testing, and (2) the circumstances and impact of identified disputes. GAO evaluated documentation and interviewed officials from DOT&amp;E, other DOD test organizations, and the acquisition community. GAO also conducted 10 case studies from among 42 programs identified by military service officials as having had significant disputes with DOT&amp;E. GAO analyzed information received from acquisition and testing officials to verify the merits and degree of those disputes. Based on this assessment, GAO selected case studies that were representative of the most significant disputes identified across the military services.
What GAO Recommends
GAO is not making any recommendations in this report.
For more information, contact Michael Sullivan at (202) 512-4841 or sullivanm@gao.gov.Tue, 02 Jun 2015 13:00:00 -0400Letter ReportSequestration: Documenting and Assessing Lessons Learned Would Assist DOD in Planning for Future Budget Uncertainty, May 27, 2015http://www.gao.gov/products/GAO-15-470
What GAO Found
To implement sequestration in fiscal year (FY) 2013, the Department of Defense's (DOD) discretionary resources were reduced in approximate proportion to the size of its appropriation accounts, with the largest reductions to DOD's largest accounts, operation and maintenance. The military services' accounts absorbed about 76 percent of DOD's reduction relative to other defense accounts. In contrast to other accounts, such as procurement, DOD and the services had some flexibility to allocate varying reductions to functions and activities funded by the operation and maintenance accounts.
DOD Sequestration Reductions by Appropriation Account, Fiscal Year 2013
To implement sequestration reductions, DOD took near-term actions to preserve key programs and functions and reduced spending on lower priorities. Many effects that DOD officials attributed to the reductions were interdependent, with some difficult to quantify and assess. Effects DOD identified generally related to:
Costs and spending : Some actions increased costs or deferred spending to subsequent years (e.g., procurement delays to the Navy's P-8A aircraft program resulted in an estimated $56.7 million life-cycle cost increase).
Time frames or cancellations : Delayed or cancelled activities affected some plans to improve military readiness (e.g., the Air Force cancelled or reduced participation in most of its planned large-scale FY 2013 training events, and expects delayed achievement of longer-term readiness goals).
Availability of forces and equipment : Some actions decreased the forces and equipment ready for contingencies (e.g., the Navy cancelled or delayed some planned ship deployments, which resulted in a 10 percent decrease in its deployed forces worldwide).
DOD and the services relied on existing processes and flexibilities to mitigate the effect of sequestration in FY 2013, but did not comprehensively document or assess best practices or lessons learned from their experiences. For example, the services used authorities to reprogram and transfer funds, which allowed them to reverse some initial actions taken to reduce spending. GAO identified some DOD efforts to document lessons learned or best practices related to the implementation of the FY 2013 sequestration, but found them to be limited in scope and not widely shared. Without documenting and assessing lessons learned and best practices, such as strategies for evaluating interdependence of funding sources and programs, and leveraging existing mechanisms to share this information, DOD is missing an opportunity to gain institutional knowledge that would facilitate future decision making about budgetary reductions.
Why GAO Did This Study
In March 2013, the President ordered across-the-board spending reductions, known as sequestration, for all federal agencies and departments. As a result, DOD's discretionary resources were reduced by about $37.2 billion over the remainder of FY 2013. The joint explanatory statement accompanying the National Defense Authorization Act for Fiscal Year 2014 included a provision for GAO to review DOD's implementation and effects of the FY&nbsp;2013 sequestration. This report examines, for the FY 2013 sequestration, (1) how DOD allocated reductions, (2) what effects DOD has identified on selected DOD programs, services, and military readiness, and (3) the extent to which DOD took actions to mitigate the effects of sequestration.
GAO analyzed DOD's FY 2013 budget and execution data and reviewed a nongeneralizeable sample of five types of expenses or investments—such as maintenance, and a selection of weapon systems and military construction projects—based on the magnitude of reductions and possible relation to readiness. For each area, GAO reviewed data on planned versus actual spending and reports on actions taken and interviewed DOD and service officials.
What GAO Recommends
GAO recommends that DOD document and assess lessons learned and best practices from implementing sequestration, as well as leverage existing mechanisms to share these lessons within the services and across the department. DOD concurred with GAO's recommendations.
For more information, contact Johana R. Ayers at (202) 512-5741 or ayersj@gao.gov; or Michael J. Sullivan at (202) 512-4841 or sullivanm@gao.gov.Wed, 27 May 2015 13:00:00 -0400Letter ReportBudgeting for Disasters: Approaches to Budgeting for Disasters in Selected States, March 26, 2015http://www.gao.gov/products/GAO-15-424
What GAO Found
The 10 selected states in GAO's review—Alaska, California, Florida, Indiana, Missouri, New York, North Dakota, Oklahoma, Vermont, and West Virginia—had established budget mechanisms to ensure the availability of funding for the immediate costs of unforeseen disasters and the ongoing costs of past disasters. All 10 states provided disaster funds at the start of the fiscal year and then as needed during the course of the fiscal year. Each of the selected states had its own combination of budget mechanisms that generally fell into four categories:
Statewide disaster accounts. These accounts provided the 10 states with the flexibility to fund disaster expenses across state entities or for local governments. States typically funded these accounts through general fund revenue. Six states also used other sources, such as revenues from oil and gas taxes and fees on homeowner's and commercial insurance. The amounts appropriated to these accounts at the start of the fiscal year were based on a range of considerations, such as estimates of disaster costs based on past events and emergency response costs for unforeseen disasters.
State agency budgets. Nine of the 10 states also covered a portion of unforeseen disaster costs through the operating or contingency budgets of state agencies with missions relevant to disaster response and recovery. For example, West Virginia's Division of Homeland Security and Emergency Management used its operating budget to cover disaster response costs. Florida's Department of Environmental Protection had a disaster contingency account funded through user fees on state parks.
Supplemental appropriations. When advance funding proved insufficient to cover disaster costs, eight of the 10 states provided supplemental funding to pay for the remaining costs. While reserve accounts such as rainy day funds could be used to provide this funding if general funds were unavailable, budget officials said their state rarely tapped these funds.
Transfer authority. All 10 states in our review allowed designated officials (i.e., the governor, budget director, or a special committee) to transfer funds within or between agencies or from statewide reserve accounts after the start of the fiscal year.
None of the 10 states in GAO's review maintained reserves dedicated solely for future disasters. Some state officials reported that they could cover disaster costs without dedicated disaster reserves because they generally relied on the federal government to fund most of the costs associated with disaster response and recovery.
While some states have increased the oversight and availability of disaster funds, all 10 states' approaches to budgeting for disasters have remained largely unchanged during fiscal years 2004 through 2013. Specifically, three states—Alaska, Indiana, and North Dakota—changed their budgeting processes to ensure that funding for disasters was appropriated before rather than after a disaster occurred. In addition, legislatures in three states—Missouri, North Dakota and West Virginia—took steps to increase their oversight of disaster spending.
Why GAO Did This Study
In recent years, natural and human-made disasters have increased in the United States in terms of both numbers and severity. For presidentially declared disasters, the federal government generally pays 75 percent of disaster costs and states cover the rest. As a result of this trend, governments at all levels have incurred increased costs for disaster response and recovery. An understanding of the approaches states take to budget for disaster costs can help inform congressional consideration of the balance between federal and state roles in funding disaster assistance.
GAO was asked to examine how states typically budget for costs associated with disasters and any changes to those budget approaches during the past decade. This report reviewed (1) the approaches selected states use to budget for and fund state-level disaster costs; and (2) how, if at all, state disaster budgeting approaches have changed over time.
For this review, GAO selected 10 states based on criteria such as the number of major disaster declarations and denials for each state from fiscal years 2004 to 2013. GAO reviewed state statutes, budgets, and other documents explaining states' approaches to budgeting for disaster costs and interviewed state officials. Although GAO's findings are not generalizable, they are indicative of the variation in budget mechanisms among the states.
GAO is not making recommendations. GAO received and incorporated, as appropriate, technical comments from the Department of Homeland Security and the 10 selected states.
For more information, contact Michelle Sager at (202) 512-6806 or sagerm@gao.gov.Mon, 27 Apr 2015 13:00:00 -0400Letter ReportMunicipalities in Fiscal Crisis: Federal Agencies Monitored Grants and Assisted Grantees, but More Could Be Done to Share Lessons Learned, March 20, 2015http://www.gao.gov/products/GAO-15-222
What GAO Found
Grant management challenges experienced by municipalities in fiscal crisis. The diminished capacity of selected municipalities in fiscal crisis hindered their ability to manage federal grants in several ways. First, reductions in human capital capacity through the loss of staff greatly reduced the ability of some cities to carry out grant compliance and oversight responsibilities. Second, the loss of human capital capacity also led to grant management skills gaps. For example, in Detroit, Michigan, loss and turnover of staff with the skills to properly draw down funds caused some grant funds to remain unspent. Third, decreased financial capacity reduced some municipalities' ability to obtain federal grants. For example, both Flint, Michigan, and Stockton, California, did not apply for competitive federal grants with maintenance of effort requirements because their city governments were unable to ensure that they would maintain non-federal funding at current levels. Fourth, outdated information technology (IT) systems hampered municipalities' ability to oversee and report on federal grants. For example, Detroit's 2011 and 2012 single audits identified IT deficiencies in every federal grant program reviewed, which led to the city having to pay back some federal grant funds. In response to these challenges, the four municipalities GAO reviewed have taken a number of actions to improve their management of federal grants including centralizing their grant management processes and partnering with local nonprofits to apply for grants.
Federal grant monitoring and oversight processes. The eight grant programs GAO reviewed used, or had recently implemented, a risk-based approach to grant monitoring and oversight. These approaches applied to all grantees not just those in fiscal crisis. The grant programs administered by the Department of Housing and Urban Development (HUD) and the Department of Justice (Justice) consistently assessed grantees against a variety of risk factors to help program officials determine the need for more in-depth monitoring actions such as onsite monitoring visits. When program officials at HUD, Justice, the Department of Transportation (DOT), and the Department of Homeland Security (DHS) found deficiencies through monitoring actions, they required corrective actions from their grantees. However, in some cases, local grantees did not implement these corrective actions, resulting in continued grant management problems. In such cases, federal program officials took actions such as increasing the level of financial oversight or withholding grant funds until the grantee improved its grant management processes.
Actions taken to assist municipalities in fiscal crisis. The White House Working Group on Detroit—an interagency group assembled by the White House to assist Detroit—as well as selected agencies took a variety of actions to aid municipalities in fiscal crisis. These actions included improving collaboration between selected municipalities and federal agencies, providing flexibilities to help grantees meet grant requirements, and offering direct technical assistance. However, neither individual agencies nor the Office of Management and Budget (OMB), which was involved in the working group and has an interagency leadership role in achieving administration policy, have formal plans to document and share lessons learned from the efforts to assist Detroit with other federal agencies and local governments.
Why GAO Did This Study
Similar to the federal and state sectors, local governments are facing long-term fiscal pressures. In cases of fiscal crisis, municipalities may be required to make significant cuts to personnel that may impact their oversight of federal grants. GAO was asked to review the oversight of federal grants received by municipalities in fiscal crisis. This report (1) identifies challenges that selected municipalities in fiscal crisis experienced when managing federal grants and steps taken by those municipalities; (2) reviews the monitoring processes that federal agencies used to oversee selected grants to selected municipalities; and (3) examines actions the White House Working Group on Detroit and selected federal agencies took to assist municipalities in fiscal crisis.
For this review, GAO conducted site visits to four municipalities in fiscal crisis: Detroit, Michigan; Flint, Michigan; Camden, New Jersey; and Stockton, California. GAO focused on eight grant programs administered by DHS, HUD, Justice, and DOT. The basis for selecting these grant programs included dollar amount and grant type. GAO reviewed grant oversight policies and actions for fiscal years 2009-2013 and interviewed local, state, and federal officials, including those at Treasury and OMB.
What GAO Recommends
GAO recommends that OMB direct federal agencies involved in the White House Working Group on Detroit to document and share lessons learned from federal efforts to assist Detroit. OMB neither agreed nor disagreed with this recommendation.
For more information, contact J. Christopher Mihm at (202) 512-6806 or mihmj@gao.gov and Robert J. Cramer at (202)-512-7227 or cramerr@gao.gov.Fri, 20 Mar 2015 13:00:00 -0400Letter ReportFiscal Year 2016 Budget Request: U.S. Government Accountability Office, March 10, 2015http://www.gao.gov/products/GAO-15-417T
Fiscal Year 2016 Budget Request
GAO’s fiscal year (FY) 2016 budget request of $553.1 million supports 3,055 full time equivalent (FTE) staff and continues progress towards achieving an optimal level of 3,250 FTE. The request also provides the resources to maintain current operations and make limited investments in GAO’s information technology (IT) and building infrastructure. Costs will be offset with $33.4 million in reimbursements, primarily from financial audits and rental income.
The Congress used GAO’s work extensively in 2014 to identify legislative solutions to emerging problems, achieve cost savings, and find efficiencies in federal agencies and programs. GAO’s work helped Congress achieve some of the billions in savings and revenue enhancements needed to avoid sequestration in fiscal years 2014 and 2015. In addition, GAO’s work was cited repeatedly in the Consolidated and Further Continuing Appropriations Act, 2015, and contributed to over a dozen key authorizations and reauthorizations, including, among others, the Department of Defense, the Coast Guard, workforce programs, and agriculture programs. GAO’s work also contributed to bills intended to improve veteran’s health care, federal acquisitions of information technology and weapons systems, and transparency of federal programs.
In addition to the $54.4 billion in financial benefits from GAO’s work, during fiscal year 2014, we recorded over 1,200 program and operational improvements in numerous areas affecting public safety and security and the efficient and effective functioning of government programs, including:
• cybersecurity governance;
• oversight of international food aid;
• security of diplomatic facilities and personnel overseas;
• sharing of terrorism-related information with federal and non-federal partners; and
•&nbsp; the future of nanomanufacturing, including research and development, U.S. competitiveness, and environmental, health, and safety concerns.
Workforce and succession planning also remain a priority for GAO. In FY 2015, GAO plans to achieve a staffing level of 3,015 FTEs through a targeted recruiting strategy to address critical skills gaps. This is a positive step forward in rebuilding staff capacity which in recent years had fallen to the lowest level since 1935. The additional staff will help ensure GAO has the resources to assist Congress in improving government performance, effectiveness, and accountability, as well as support GAO’s commitment to service and quality. GAO’s limited investments in IT and building infrastructure will allow GAO to further streamline business operations, increase staff productivity, as well as improve access to information. Implementation will be done through a phased approach to reduce risk and ensure effective implementation.
Background
GAO’s mission is to support Congress in meeting its constitutional responsibilities and to help improve the performance and accountability of the federal government for the benefit of the American people. GAO provides nonpartisan, objective, and reliable information to Congress, federal agencies, and to the public and recommends improvements, when appropriate, across the full breadth and scope of the federal government’s responsibilities.
GAO’s work supports a broad range of interests throughout Congress. In fiscal year 2014, GAO received requests for our work from 94 percent of the standing committees of Congress and almost 70 percent of their subcommittees. Additionally, senior GAO officials testified 129 times on a wide range of issues that touched virtually all major federal agencies.
GAO remains one of the best investments in the federal government, and GAO’s dedicated staff continues to deliver high quality results. In fiscal year 2014 alone, GAO’s work yielded $54.4 billion in financial benefits – a return of about $100 for every dollar invested in GAO. Since fiscal year 2003, GAO’s work has resulted in:
• over ½ trillion dollars in financial benefits; and
• about 15,800 program and operational benefits that helped to change laws, improve public services, and promote sound management throughout government.
These results are a reflection of the dedication and hard work of GAO’s staff. GAO has again been recognized as an employer of choice, and continues to be ranked near the top on "best places to work" lists. In December 2014 the Partnership for Public Service ranked GAO second among mid-size agencies as one of the best places to work in the federal government.
For more information contact Office of Public Affairs at (202) 512-4800 or youngc1@gao.govTue, 10 Mar 2015 13:00:00 -0400TestimonyFiscal Year 2016 Budget Request: U.S. Government Accountability Office, February 25, 2015http://www.gao.gov/products/GAO-15-403T
Fiscal Year 2016 Budget Request
GAO’s fiscal year (FY) 2016 budget request of $553.1 million supports 3,055 full time equivalent (FTE) staff and continues progress towards achieving an optimal level of 3,250 FTE. The request also provides the resources to maintain current operations and make limited investments in GAO’s information technology (IT) and building infrastructure. Costs will be offset with $33.4 million in reimbursements, primarily from financial audits and rental income.
The Congress used GAO’s work extensively in 2014 to identify legislative solutions to emerging problems, achieve cost savings, and find efficiencies in federal agencies and programs. GAO’s work helped Congress achieve some of the billions in savings and revenue enhancements needed to avoid sequestration in fiscal years 2014 and 2015. In addition, GAO’s work was cited repeatedly in the Consolidated and Further Continuing Appropriations Act, 2015, and contributed to over a dozen key authorizations and reauthorizations, including, among others, the Department of Defense, the Coast Guard, workforce programs, and agriculture programs. GAO’s work also contributed to bills intended to improve veteran’s health care, federal acquisitions of information technology and weapons systems, and transparency of federal programs.
In addition to the $54.4 billion in financial benefits from GAO’s work, during fiscal year 2014, we recorded over 1,200 program and operational improvements in numerous areas affecting public safety and security and the efficient and effective functioning of government programs, including:
• cybersecurity governance;
• oversight of international food aid;
• security of diplomatic facilities and personnel overseas;
• sharing of terrorism-related information with federal and non-federal partners; and
•&nbsp; the future of nanomanufacturing, including research and development, U.S. competitiveness, and environmental, health, and safety concerns.
Workforce and succession planning also remain a priority for GAO. In FY 2015, GAO plans to achieve a staffing level of 3,015 FTEs through a targeted recruiting strategy to address critical skills gaps. This is a positive step forward in rebuilding staff capacity which in recent years had fallen to the lowest level since 1935. The additional staff will help ensure GAO has the resources to assist Congress in improving government performance, effectiveness, and accountability, as well as support GAO’s commitment to service and quality. GAO’s limited investments in IT and building infrastructure will allow GAO to further streamline business operations, increase staff productivity, as well as improve access to information. Implementation will be done through a phased approach to reduce risk and ensure effective implementation.
Background
GAO’s mission is to support Congress in meeting its constitutional responsibilities and to help improve the performance and accountability of the federal government for the benefit of the American people. GAO provides nonpartisan, objective, and reliable information to Congress, federal agencies, and to the public and recommends improvements, when appropriate, across the full breadth and scope of the federal government’s responsibilities.
GAO’s work supports a broad range of interests throughout Congress. In fiscal year 2014, GAO received requests for our work from 94 percent of the standing committees of Congress and almost 70 percent of their subcommittees. Additionally, senior GAO officials testified 129 times on a wide range of issues that touched virtually all major federal agencies.
GAO remains one of the best investments in the federal government, and GAO’s dedicated staff continues to deliver high quality results. In fiscal year 2014 alone, GAO’s work yielded $54.4 billion in financial benefits – a return of about $100 for every dollar invested in GAO. Since fiscal year 2003, GAO’s work has resulted in:
• over ½ trillion dollars in financial benefits; and
• about 15,800 program and operational benefits that helped to change laws, improve public services, and promote sound management throughout government.
These results are a reflection of the dedication and hard work of GAO’s staff. GAO has again been recognized as an employer of choice, and continues to be ranked near the top on "best places to work" lists. In December 2014 the Partnership for Public Service ranked GAO second among mid-size agencies as one of the best places to work in the federal government.
For more information contact Office of Public Affairs at (202) 512-4800 or youngc1@gao.gov
&nbsp;Wed, 25 Feb 2015 12:00:00 -0500TestimonyState and Local Governments' Fiscal Outlook: 2014 Update, December 17, 2014http://www.gao.gov/products/GAO-15-224SP
GAO's State and Local Fiscal Simulations
Fiscal sustainability presents a national challenge shared by all levels of government. Since 2007, GAO has published simulations of long-term fiscal trends in the state and local government sector. These simulations have consistently shown that state and local governments face long-term fiscal pressures. Absent any policy changes, the sector will face an increasing gap between expenditures and receipts in future years. Closing this gap will require state and local governments to make policy changes to assure that receipts are at least equal to expenditures.
GAO's model uses the Bureau of Economic Analysis's National Income and Product Accounts as the primary data source and presents the results in the aggregate for the state and local sector as a whole. GAO's model shows the level of receipts and expenditures for the sector until 2060 based on current and historical spending and revenue patterns. The model assumes that the current set of policies in place across state and local government remains constant to show a simulated long-term outlook.
The model incorporates the Congressional Budget Office's economic projections. These projections capture near-term cyclical swings in the economy. Because the model covers the sector in the aggregate, the fiscal outcomes for individual states and localities cannot be captured. This product is part of a body of work on the nation's long-term fiscal challenges. Related products can be found at http://www.gao.gov/fiscal_outlook/state_local_fiscal_model/overview#t=2.
For more information, contact Michelle Sager, 202-512-6806 or sagerm@gao.gov, or Oliver Richard, 202-512-8424 or richardo@gao.gov.
&nbsp;Wed, 17 Dec 2014 12:00:00 -0500Other Written ProductGrants Management: Programs at HHS and HUD Collect Administrative Cost Information but Differences in Cost Caps and Definitions Create Challenges, December 12, 2014http://www.gao.gov/products/GAO-15-118
What GAO Found
All six of the grant programs GAO reviewed had mechanisms in place to capture the administrative costs charged to their grant programs, either via a computerized system or paper reporting. All the programs reported that they reviewed their grantees' costs for appropriateness. Two of the programs make administrative cost data available online. The programs GAO reviewed track administrative costs in different ways. For some programs administrative and program costs are reported separately, while for others they are included in the same line items. Administrative costs reported to the federal government may understate the actual cost to administer a grant program. GAO found examples of grantees absorbing part of the costs to administer a grant. Some primary grant recipients stated that when such costs were not reimbursed by the federal grant, they would cover those expenses themselves. Another grantee said he relies on state appropriations to cover the majority of administrative costs.
GAO identified two factors that hinder the comparability of administrative cost data in the programs it reviewed. First, is the existence of cost caps. These caps limit the amount of the grant that may be charged as administrative costs, and thereby affect what is reported to the federal government as administrative costs. For the programs GAO reviewed caps ranged from 5 to 26 percent, with one program having no cap. This variation can make some programs look more administratively expensive than others. Second, differences in what is defined as an administrative cost can present an even greater challenge to comparing costs across programs. Programs have different missions, priorities, services, and clients; as a result definitions of administrative costs vary from program to program. Therefore, different programs may treat similar costs differently. A cost that may be classified as administrative in one program may be considered a direct program delivery cost by another. For example, the salary of an employee who enrolls participants in one Department of Health and Human Services (HHS) program is considered a program cost but an employee who holds a similar position determining the eligibility of participants in another HHS program may be considered an administrative cost depending on the state where it is administered. This variation in definitions means that a program with high administrative costs may not be less efficient than a program with low administrative costs.
Given these issues, it is challenging to collect comparable information for different grant programs. Any use of information on administrative costs needs to recognize these concerns particularly when comparing programs with different types of objectives, projects, or services. Comparisons of costs may be appropriate when reviewing programs that fulfill similar missions or provide similar services. However, comparisons across different types of grant programs should be made with caution.
Why GAO Did This Study
The federal government spends billions of dollars on various grants to achieve diverse purposes. The total cost of a grant includes both program costs that directly support the grant's mission and services and administrative costs to run the program. These administrative activities, such as managing finances, are essential. It is important for agencies to track the cost of these activities to provide accountability for efficient use of federal resources.
GAO was asked to review how costs associated with the administration of grants are tracked and the availability of this information. GAO examined (1) the extent to which selected federal agencies and grantees have mechanisms and guidance in place to distinguish between administrative and program costs and to facilitate the availability of these data to Congress and the public; and (2) the extent to which there are challenges that hinder the comparability of grant administrative cost data. For this review GAO selected six grant programs—three in HHS and three in the Department of Housing and Urban Development (HUD). Agencies and grant programs were selected in part based on obligation amounts and grant types. GAO reviewed each program's statutes, regulations, guidance, and grant documents, as applicable, and interviewed agency officials. Although GAO's findings are not generalizable, they are indicative of the wide variation associated with the mechanisms and guidance for tracking grant administrative costs.
GAO received and incorporated, as appropriate, technical comments from HHS. HUD did not provide comments.
For more information, contact Susan J. Irving at (202) 512-6806 or irvings@gao.gov.Fri, 12 Dec 2014 12:00:00 -0500Letter ReportGrant Program Consolidations: Lessons Learned and Implications for Congressional Oversight, December 12, 2014http://www.gao.gov/products/GAO-15-125
What GAO Found
Consolidations from fiscal years 1990 through 2012. There is no authoritative, accurate tally of enacted grant program consolidations. In addition, there is no commonly accepted definition of what constitutes a grant program consolidation. From a variety of sources, GAO identified 15 grant program consolidations during this period. Most of these consolidations either combined a number of grant programs used for specific activities (such as Shelter Plus Care), known as categorical grants, into a broader categorical grant, such as the Continuum of Care (CoC) program or established a Performance Partnership, which offers additional flexibility in using funds across multiple programs but maintains accountability for meeting certain performance measures. Block grant approaches to consolidation prior to 1990 combined programs for broad purposes, such as work assistance. The more recent approaches, referred to as hybrid, often combine categorical grant programs and emphasize strong performance standards and accountability. Hybrid approaches can improve the efficiency of grant administration and may reduce fragmentation, overlap, and duplication.
State and local government actions. State and local officials in the three case study consolidations GAO selected for review relied on existing grant management structures and established relationships to facilitate implementation of the grant program consolidations. In the Transportation Alternatives (TA) program the impact of the consolidation was delayed by states and local officials' reliance on carryover funds from predecessor grant programs while these funds were still available. Officials reported both benefits and challenges ranging from administrative flexibility such as lack of central oversight by states, lack of or inaccurate performance data, and conflicting reporting requirements.
Lessons to consider. The key to any grant program consolidation initiative is identifying and agreeing on goals—such as improved grant administration and changed programmatic outcomes—and to design and plan for successful implementation, according to findings from the case studies and prior GAO reports. Grant consolidations offer the opportunity to improve grant administration by expanding the opportunities of narrowly targeted grants and by reducing fragmentation, overlap, and duplication. Consolidation initiatives that answer key questions can provide a data-driven consolidation rationale and show stakeholders that a range of alternatives has been considered. These evaluations should include responses to key questions such as the following: What are the goals of the consolidation? What opportunities will be addressed through the consolidation and what problems will be solved?
GAO's prior work found that few executive branch agencies regularly conduct in-depth program evaluations to assess their programs' impact. The Office of Management and Budget (OMB), as the focal point for overall management in the executive branch, plays a key role in improving the performance of federal grant programs and has developed or contributed many tools to encourage improvements to federal grants and program performance. Agencies, the Congress—as well as grantees—can benefit from guidance, which currently does not exist, to assist with identifying consolidation opportunities, particularly those requiring statutory changes, and developing consolidation proposals.
Why GAO Did This Study
GAO has previously reported that consolidations may help increase the effectiveness and efficiency of government programs.
GAO was asked to review grant program consolidations in regard to reducing overlap and duplication. This report: (1) describes approaches taken to grant programs that have been consolidated from fiscal year 1990 through 2012, (2) examines federal, state and local actions taken to administer the programs, and (3) analyzes lessons learned for future consideration of grant program consolidations.
GAO reviewed literature on grant program consolidations. For this review GAO selected three case study grant program consolidations, the TA and CoC programs, and the National Environmental Performance Partnership System. GAO conducted interviews with state and local officials in Colorado, Delaware, Florida, and Massachusetts. GAO selected these states and localities based on several selection criteria, such as state participation and funding. The selected locations and grant program consolidations are not generalizable, but they provided important insights about grant consolidations.
What GAO Recommends
GAO recommends OMB develop guidance on identifying grant program consolidation opportunities and the analysis to improve their outcomes. GAO incorporated technical comments from the Environmental Protection Agency, Departments of Housing and Urban Development and Transportation, and OMB.
For more information, contact Susan J. Irving at (202) 512-6806 or irvings@gao.gov.Fri, 12 Dec 2014 12:00:00 -0500Letter ReportFinancial Audit: Bureau of the Fiscal Service's Fiscal Years 2014 and 2013 Schedules of Federal Debt, November 10, 2014http://www.gao.gov/products/GAO-15-157
What GAO Found
In GAO's opinion, the Bureau of the Fiscal Service's (Fiscal Service) Schedules of Federal Debt for fiscal years 2014 and 2013 were fairly presented in all material respects, and Fiscal Service maintained, in all material respects, effective internal control over financial reporting relevant to the Schedule of Federal Debt as of September 30, 2014. GAO's tests disclosed no instances of reportable noncompliance for fiscal year 2014 with selected provisions of applicable laws, regulations, contracts, and grant agreements related to the Schedule of Federal Debt.
From fiscal year 1997, the first year of audit, through September 30, 2014, total federal debt managed by Fiscal Service has increased by 230 percent and the debt limit has been raised 15 times, from $5,950 billion to $17,212 billion. During fiscal year 2014, delays in raising the debt limit occurred for a total of 16 business days. Also, the debt limit was suspended for the period October 17, 2013, through February 7, 2014, and again from February 15, 2014, through March 15, 2015.
Total Federal Debt Outstanding, September 30, 1997, through September 30, 2014
During the delays, Treasury deviated from its normal debt management operations and took a number of extraordinary actions—consistent with relevant laws and regulations—to avoid exceeding the debt limit. As GAO has previously reported, the debt limit does not restrict the Congress's ability to enact spending and revenue legislation that affects the level of federal debt or otherwise constrains fiscal policy; it restricts Treasury's authority to borrow to finance the decisions already enacted by the Congress and the President. The United States benefits from the confidence investors have that debt backed by the full faith and credit of the United States will be honored. As GAO has also previously reported, delays in raising the debt limit can create uncertainty in the Treasury market and lead to higher Treasury borrowing costs. To avoid such uncertainty and related borrowing costs, GAO noted in its February 2011 and July 2012 reports related to the debt limit that the Congress should consider ways to better link decisions about the debt limit with decisions about spending and revenue at the time those decisions are made to avoid potential disruptions to the Treasury market and to help inform the fiscal policy debate in a timely way.
Why GAO Did This Study
GAO is required to audit the consolidated financial statements of the U.S. government. Because of the significance of the federal debt held by the public to the government-wide financial statements, GAO audits Fiscal Service's Schedules of Federal Debt annually to determine whether, in all material respects, (1) the schedules are reliable and (2) Fiscal Service management maintained effective internal control over financial reporting relevant to the Schedule of Federal Debt. Further, GAO tests compliance with selected provisions of applicable laws, regulations, contracts, and grant agreements related to the Schedule of Federal Debt.
Federal debt managed by Fiscal Service consists of Treasury securities held by the public and by certain federal government accounts, referred to as intragovernmental debt holdings. Debt held by the public essentially represents the amount the federal government has borrowed to finance cumulative cash deficits. Intragovernmental debt holdings represent balances of Treasury securities held by federal government accounts—primarily federal trust funds such as Social Security and Medicare—that typically have an obligation to invest their excess annual receipts (including interest earnings) over disbursements in federal securities.
In commenting on a draft of this report, Fiscal Service concurred with GAO's conclusions.
For more information, contact Gary T. Engel at (202) 512-3406 or engelg@gao.gov.Mon, 10 Nov 2014 12:00:00 -0500Letter ReportData Transparency: Oversight Needed to Address Underreporting and Inconsistencies on Federal Award Website, June 30, 2014http://www.gao.gov/products/GAO-14-476
What GAO Found
Although agencies generally reported required contract information, they did not properly report information on assistance awards (e.g., grants or loans), totaling approximately $619 billion in fiscal year 2012. Specifically, 33 of 37 agencies with a budget authority of at least $400 million reported at least one contract. The other four claimed exemptions from reporting, such as the use of non-appropriated funds, but gaps in Office of Management and Budget (OMB) guidance make it unclear whether such exemptions are appropriate. Also, agencies reported required information for at least one assistance award for 1,390 of 2,183 programs listed in a federal catalog. Another 451 programs did not make an award subject to USASpending.gov reporting. However, agencies did not appropriately submit the required information for the remaining 342 programs, although many reported the information after GAO informed them of the omission. Officials with the Millennium Challenge Corporation said that they could not report because its recipients are foreign. However, OMB's guidance describes how to report foreign assistance and other agencies report such awards. OMB has taken steps to improve the completeness of assistance awards on the website, including issuing a memorandum in June 2013 directing agencies to ensure that data on USASpending.gov are consistent with agency financial records. If properly implemented, these procedures could better ensure that agencies report future assistance awards.
Few awards on the website contained information that was fully consistent with agency records. GAO estimates with 95 percent confidence that between 2 percent and 7 percent of the awards contained information that was fully consistent with agencies' records for all 21 data elements examined. The element that identifies the name of the award recipient was the most consistent, while the elements that describe the award's place of performance were generally the most inconsistent. GAO could not determine whether the remaining data elements were significantly consistent or inconsistent, in large part because of incomplete or inadequate agency records. Four data elements in particular (e.g., program source information and the state of performance) had inadequacies that were significant. This means that for each of the four data elements, at least 10 percent of awards contained unverifiable information. While OMB placed responsibilities on agencies to ensure their reported information is accurate and substantiated by supporting documentation, this approach has had limited effect on the overall quality of the data on the website, reinforcing the need for a more comprehensive oversight process by OMB and more specific guidance from OMB on how agencies are to validate information reported to USASpending.gov. Until these weaknesses are addressed, any effort to use the data will be hampered by uncertainties about accuracy.
Why GAO Did This Study
The Federal Funding Accountability and Transparency Act was enacted in 2006 to increase the transparency over the more than $1 trillion spent by the federal government on awards annually. Among other things, the act requires OMB to establish a website that contains data on federal awards (e.g., contracts and grants) and guidance on agency reporting requirements for the website, USASpending.gov.
GAO's objectives were to determine the extent to which (1) agencies report required award data and (2) the data on the website are consistent with agency records. To assess reporting, GAO reviewed laws and guidance, analyzed reported award data, and interviewed agency officials. To assess inconsistency, GAO selected a representative sample of 385 fiscal year 2012 awards and traced them back to agency source records.
What GAO Recommends
To improve reliability of information on the USASpending.gov website, GAO is making recommendations to the Director of OMB to (1) clarify guidance on reporting award information and maintaining supporting records, and (2) develop and implement oversight processes to ensure that award data are consistent with agency records. GAO also recommends that the Chief Executive Officer of the Millennium Challenge Corporation report its award information, as required. OMB generally agreed with GAO's recommendations. While the Millennium Challenge Corporation neither agreed nor disagreed with the recommendation, GAO believes it is needed, as discussed in this report.
For more information, contact Carol R. Cha at (202) 512-4456 or chac@gao.gov.Fri, 01 Aug 2014 13:00:00 -0400Letter ReportBudget Issues: Opportunities to Reduce Federal Fiscal Exposures Through Greater Resilience to Climate Change and Extreme Weather, July 29, 2014http://www.gao.gov/products/GAO-14-504T
What GAO Found
Climate change and related extreme weather impacts on infrastructure and federal lands increase fiscal exposures that the federal budget does not fully reflect. Investing in resilience—actions to reduce potential future losses rather than waiting for an event to occur and paying for recovery afterward—can reduce the potential impacts of climate-related events. Implementing resilience measures creates additional up-front costs but could also confer benefits, such as a reduction in future damages from climate-related events. Key examples of vulnerable infrastructure and federal lands GAO has identified include:
Department of Defense (DOD) facilities. DOD manages a global real-estate portfolio that includes over 555,000 facilities and 28 million acres of land with a replacement value DOD estimates at close to $850 billion. This infrastructure is vulnerable to the potential impacts of climate change and related extreme weather events. For example, in May 2014, GAO reported that a military base in the desert Southwest experienced a rain event in August 2013 in which about 1 year's worth of rain fell in 80 minutes. The flooding caused by the storm damaged more than 160 facilities, 8 roads, 1 bridge, and 11,000 linear feet of fencing, resulting in an estimated $64 million in damages.
Other large federal facilities. The federal government owns and operates hundreds of thousands of other facilities that a changing climate could affect. For example, the National Aeronautics and Space Administration (NASA) manages more than 5,000 buildings and other structures. GAO reported in April 2013 that, in total, these NASA assets—many of which are in coastal areas vulnerable to storm surge and sea level rise—represent more than $32 billion in current replacement value.
Federal lands. The federal government manages nearly 30 percent of the land in the United States—about 650 million acres of land—including 401 national park units and 155 national forests. GAO reported in May 2013 that these resources are vulnerable to changes in the climate, including the possibility of more frequent and severe droughts and wildfires. Appropriations for federal wildland fire management activities have tripled since 1999, averaging over $3 billion annually in recent years.
GAO has reported that improved climate-related technical assistance to all levels of government can help limit federal fiscal exposures. The federal government invests tens of billions of dollars annually in infrastructure projects that state and local governments prioritize, such as roads and bridges. Total public spending on transportation and water infrastructure exceeds $300 billion annually, with about 25 percent coming from the federal government and the rest from state and local governments. GAO's April 2013 report on infrastructure adaptation concluded that the federal government could help state and local efforts to increase their resilience by (1) improving access to and use of available climate-related information, (2) providing officials with improved access to technical assistance, and (3) helping officials consider climate change in their planning processes.
Why GAO Did This Study
Certain types of extreme weather events have become more frequent or intense according to the United States Global Change Research Program, including prolonged periods of heat, heavy downpours, and, in some regions, floods and droughts. While it is not possible to link any individual weather event to climate change, the impacts of these events affect many sectors of our economy, including the budgets of federal, state, and local governments.
GAO focuses particular attention on government operations it identifies as posing a “high risk” to the American taxpayer and, in February 2013, added to its High Risk List the area Limiting the Federal Government's Fiscal Exposure by Better Managing Climate Change Risks . GAO's past work has identified a variety of fiscal exposures—responsibilities, programs, and activities that may explicitly or implicitly expose the federal government to future spending.
This testimony is based on reports GAO issued from August 2007 to May 2014, and discusses (1) federal fiscal exposures resulting from climate-related and extreme weather impacts on critical infrastructure and federal lands, and (2) how improved federal technical assistance to all levels of government can help reduce climate-related fiscal exposures.
GAO is not making new recommendations but has made numerous recommendations in prior reports on this topic, which are in varying states of implementation by the Executive Office of the President and federal agencies.
For more information, contact Alfredo Gomez at (202) 512-3841 or gomezj@gao.gov.Tue, 29 Jul 2014 13:00:00 -0400TestimonyManagement Report: Improvements Are Needed in the Bureau of the Fiscal Service's Information Systems Controls, July 18, 2014http://www.gao.gov/products/GAO-14-693R
What GAO Found
During GAO's audit of the Schedules of Federal Debt Managed by the Department of the Treasury's (Treasury) Bureau of the Fiscal Service (Fiscal Service) for the fiscal years ended September 30, 2013, and 2012, GAO identified 14 new information systems general control deficiencies related to security management, access controls, and configuration management. In a separately issued Limited Official Use Only report, GAO communicated to the Fiscal Service management detailed information regarding the 14 new information systems general control deficiencies and made 16 recommendations to address these control deficiencies.
These new deficiencies in Fiscal Service's information systems controls, along with unresolved control deficiencies from prior audits, collectively represent a significant deficiency in Fiscal Service's internal control over financial reporting. The potential effect of these control deficiencies on the Schedule of Federal Debt financial reporting for fiscal year 2013 was mitigated primarily by Fiscal Service's physical security measures and compensating management and reconciliation controls designed to detect potential misstatements on the Schedule of Federal Debt.
In addition, during GAO's follow-up on the status of Fiscal Service's corrective actions to address information systems control-related deficiencies and associated recommendations contained in GAO's prior years' reports that were open as of September 30, 2012, GAO determined that corrective actions were complete for 7 of the 13 open recommendations and corrective action was in progress for each of the 6 remaining open recommendations related to access controls and configuration management. In the Limited Official Use Only report, GAO communicated detailed information regarding actions taken by the Fiscal Service to address the control deficiencies related to these open recommendations.
Why GAO Did This Study
GAO is required to audit the consolidated financial statements of the U.S. government. Because of the significance of the federal debt held by the public to the government-wide financial statements, GAO audits Fiscal Service's Schedules of Federal Debt annually. As part of these audits, GAO performs a review of information systems controls over key Fiscal Service financial systems relevant to the Schedule of Federal Debt.
This report presents the deficiencies identified during GAO’s fiscal year 2013 testing of information systems controls over key Fiscal Service financial systems that are relevant to the Schedule of Federal Debt. This report also includes the results of GAO’s follow-up on the status of Fiscal Service’s corrective actions to address information systems control-related deficiencies and associated recommendations contained in GAO’s prior years’ reports that were open as of September 30, 2012.
What GAO Recommends
In a separately issued Limited Official Use Only report, GAO made 16 recommendations to address the 14 new information systems general control deficiencies related to security management, access controls, and configuration management. In commenting on a draft of the separately issued Limited Official Use Only report, the Commissioner of the Bureau of the Fiscal Service acknowledged the significant deficiency in internal control over financial reporting and continues to move forward to address this deficiency. The Commissioner further commented that Fiscal Service is committed to having effective internal controls for its information technology systems. Accordingly, Fiscal Service will continue to look for efficient and effective ways to improve and ensure the consistent application of agency-wide security controls over all systems.
For more information, contact Gary T. Engel at&nbsp;(202) 512-3406 or engelg@gao.gov .Fri, 18 Jul 2014 13:00:00 -0400CorrespondenceDebt Management: Survey of Investors in Treasury Securities (GAO-14-562SP, June 16, 2014), an E-supplement to GAO-14-535, June 16, 2014http://www.gao.gov/products/GAO-14-562SP
This e-supplement is a companion to our report entitled, "DEBT MANAGEMENT: Floating Rate Notes Can Help Treasury Meet Borrowing Goals, but Additional Actions Are Needed to Help Manage Risk," GAO-14-535. The purpose of this e-supplement is to provide information from a survey of the largest domestic investors in U.S. treasuries. The survey was used to gather information on overall demand for Treasury securities from a range of investors and to determine whether any changes would help Treasury meet its debt management goals.
&nbsp;Mon, 23 Jun 2014 13:00:00 -0400Other Written ProductDebt Management: Floating Rate Notes Can Help Treasury Meet Borrowing Goals, but Additional Actions Are Needed to Help Manage Risk, June 16, 2014http://www.gao.gov/products/GAO-14-535
What GAO Found
Issuing floating rate notes (FRN) is likely to help the Department of the Treasury (Treasury) meet its goals to borrow at the lowest cost over time, extend the average maturity of the debt portfolio, and increase demand for Treasury securities, but it also presents risks related to changes in interest rates.
GAO simulated the costs of 2-year Treasury FRNs using historical Treasury auction data and found that interest costs of the FRNs were generally less than costs of fixed-rate 2-year notes, but could be either more or less than costs of 13-week bills, depending on assumptions about how investors price the FRNs. GAO also found that in rising interest rate environments, the FRNs may be more costly than these alternatives.
Multiple components contribute to achieving lowest cost financing over time: issuing FRNs is part of Treasury's approach to achieving this goal. GAO analysis identified a number of design elements that may affect how FRNs contribute to that goal. Treasury officials believe it is prudent for Treasury to extend the average maturity of its debt portfolio because the debt level is already high and is expected to grow. Relative to issuing shorter-term debt, 2-year FRNs will help Treasury extend the average maturity of the debt portfolio and thereby reduce the risk inherent in going to market. Because the interest rate on a FRN can change during the life of the security, FRNs expose Treasury to the risk of rising interest rates whereas fixed-rate securities of the same maturity do not. These shifts in risk are likely to be small because currently FRNs are expected to constitute a small proportion of Treasury debt. Although managing interest rate risk is an important aspect of Treasury's goal to borrow at the lowest cost over time, Treasury does not track and report a measure of the average maturity of the portfolio that captures the additional interest rate risk of FRNs.
One element of the design of the 2-year FRN—the difference between the term of its index rate (13 weeks) and the length of its effective reset period (one week)—is not typical for floating rate notes and creates tradeoffs in interest rate risks but also may result in additional demand for the product. The risks could affect the pricing of FRNs and raise Treasury's borrowing costs in environments of high and volatile interest rates. Treasury officials told us they examined design elements, including this difference, before issuing the 2-year FRN. However, Treasury had not analyzed how the difference may affect FRN pricing.
FRNs give Treasury debt managers additional flexibility by increasing demand for Treasury securities and by adding a new security that meets the high demand for short-term securities. Results from GAO's survey of a broad range of investors and interviews with market participants found that market participants likely will purchase Treasury FRNs primarily as a substitute for other Treasury securities, but they will also purchase the FRNs as a substitute for non-Treasury securities, bringing new and potentially growing demand to Treasury. To provide the lowest cost of financing the government over time, Treasury must consider investor demand for new and existing products. Survey respondents indicated an interest in FRNs of additional maturities and in other new Treasury products. Treasury currently offers many ways for market participants to provide input, but GAO's survey identified opportunities for Treasury to enhance input from some sectors—including state and local government retirement fund managers.
Why GAO Did This Study
To continue meeting its goal of financing the federal government's borrowing needs at the lowest cost over time, Treasury began issuing a new type of security—a 2-year floating rate note (FRN)—in January 2014. The FRN pays interest at a rate that resets periodically based on changes in the rate of the 13-week Treasury bill (to which the FRN is indexed). GAO was asked to review Treasury debt management, including this product and other debt management issues.
This report (1) evaluates Treasury's rationale for introducing FRNs and (2) identifies the demand for Treasury securities from a broad range of investors to assess whether changes would help Treasury meet its goals. To address these objectives, GAO used Treasury auction data from 1980 - 2014 to simulate the costs of Treasury FRNs, reviewed Treasury documents, surveyed a non-generalizable sample of 82 large domestic institutional investors across sectors, and interviewed market participants and academic experts. (For the survey and results, see GAO-14-562SP.)
What GAO Recommends
GAO recommends that Treasury (1) track and report a measure of interest rate risk in its debt portfolio, (2) analyze the price effects of the difference between the term of the index rate and the reset period, (3) examine opportunities for additional new types of securities, such as FRNs of other maturities, and (4) expand outreach to certain market participants. Treasury agreed with the recommendations and said that they had already taken steps to begin implementing them.
For more information, contact Susan J. Irving at (202) 512-6806 or irvings@gao.gov.Mon, 23 Jun 2014 13:00:00 -0400Letter ReportCoast Guard Acquisitions: Better Information on Performance and Funding Needed to Address Shortfalls, June 18, 2014http://www.gao.gov/products/GAO-14-650T
What GAO Found
The selected Coast Guard assets that GAO reviewed are generally demonstrating improved performance--according to Coast Guard operators--but GAO found that they have yet to meet all key requirements. Specifically, two assets, the HC-144 patrol aircraft and Fast Response Cutter, did not meet all key requirements during operational testing before being approved for full-rate production, and Department of Homeland Security (DHS) and Coast Guard guidance do not clearly specify when this level of performance should be achieved. Additionally, the Coast Guard changed its testing strategy for the Command, Control, Communications, Computers, Intelligence, Surveillance, and Reconnaissance (C4ISR) system and, as a result, is no longer planning to test the system's key requirements. Completing operational testing for the C4ISR system would provide the Coast Guard with the knowledge of whether this asset meets requirements.
As acquisition program costs increase across the portfolio, consuming significant amounts of funding, the Coast Guard is farther from fielding its planned fleet today than it was in 2009, in terms of the money needed to finish these programs. In 2009, GAO found that the Coast Guard needed $18.2 billion to finish its 2007 baseline, but now needs $20.7 billion to finish these assets.
To inform Congress of its budget plans, the Coast Guard uses a statutorily required 5-year Capital Investment Plan, but the law does not require the Coast Guard to report the effects of actual funding levels on individual projects and, thus, it has not done so. For example, the Coast Guard has received less funding than planned in its annual budgets, but has not reflected the effects of this reduced funding in terms of increased cost or schedule for certain projects. Without complete information, Congress cannot know the full cost of the portfolio.
The Coast Guard has repeatedly delayed and reduced its capability through its annual budget process and, therefore, it does not know the extent to which it will meet mission needs and achieve desired results. This is because the Coast Guard does not have a long-term fleet modernization plan that identifies all acquisitions needed to meet mission needs over the next two decades within available resources. Without such a plan, the Coast Guard cannot know the extent to which its assets are affordable and whether it can maintain service levels and meet mission needs. Congress should consider requiring the Coast Guard to include additional information in its Capital Investment Plan. In addition, the Secretary of DHS should clarify when minimum performance standards should be achieved, conduct C4ISR testing, and develop a long-term modernization plan. DHS concurred with the recommendations, but its position on developing a long-term plan does not fully address GAO's concerns as discussed in the report.
Why GAO Did This Study
This testimony summarizes the information contained in GAO's June 2014 report, entitled Coast Guard Acquistions: Better Information on Performance and Funding Needed to Address Shortfalls, GAO-14-450.
For more information, contact Michele Mackin at (202) 512-4841 or mackinm@gao.gov.Wed, 18 Jun 2014 13:00:00 -0400TestimonyCoast Guard Acquisitions: Better Information on Performance and Funding Needed to Address Shortfalls, June 05, 2014http://www.gao.gov/products/GAO-14-450
What GAO Found
The selected Coast Guard assets that GAO reviewed are generally demonstrating improved performance—according to Coast Guard operators—but GAO found that they have yet to meet all key requirements. Specifically, two assets, the HC-144 patrol aircraft and Fast Response Cutter, did not meet all key requirements during operational testing before being approved for full-rate production, and Department of Homeland Security (DHS) and Coast Guard guidance do not clearly specify when this level of performance should be achieved. Additionally, the Coast Guard changed its testing strategy for the Command, Control, Communications, Computers, Intelligence, Surveillance, and Reconnaissance (C4ISR) system and, as a result, is no longer planning to test the system's key requirements. Completing operational testing for the C4ISR system would provide the Coast Guard with the knowledge of whether this asset meets requirements.
As acquisition program costs increase across the portfolio, consuming significant amounts of funding, the Coast Guard is farther from fielding its planned fleet today than it was in 2009, in terms of the money needed to finish these programs. In 2009, GAO found that the Coast Guard needed $18.2 billion to finish its 2007 baseline, but now needs $20.7 billion to finish these assets.
The Total Cost of and Cost to Complete the Coast Guard's Original 2007 Baseline in 2009 and 2014
To inform Congress of its budget plans, the Coast Guard uses a statutorily required 5-year Capital Investment Plan, but the law does not require the Coast Guard to report the effects of actual funding levels on individual projects and, thus, it has not done so. For example, the Coast Guard has received less funding than planned in its annual budgets, but has not reflected the effects of this reduced funding in terms of increased cost or schedule for certain projects. Without complete information, Congress cannot know the full cost of the portfolio.
The Coast Guard has repeatedly delayed and reduced its capability through its annual budget process and, therefore, it does not know the extent to which it will meet mission needs and achieve desired results. This is because the Coast Guard does not have a long-term fleet modernization plan that identifies all acquisitions needed to meet mission needs over the next two decades within available resources. Without such a plan, the Coast Guard cannot know the extent to which its assets are affordable and whether it can maintain service levels and meet mission needs.
Why GAO Did This Study
The Coast Guard is managing a multi-billion dollar effort to modernize aging assets, including ships, aircraft, and information technology to provide new capabilities to conduct missions ranging from marine safety to defense readiness. GAO has reviewed the Coast Guard's acquisitions since 2001 and has found it faces challenges managing its portfolio. In 2007, the Coast Guard established a cost baseline of $24.2 billion for 13 assets. GAO was asked to examine the Coast Guard's current and planned acquisition portfolio.
This report assesses: (1) operational performance and testing of selected assets; (2) the current cost of the Coast Guard's portfolio and funding plans; and (3) the extent to which the Coast Guard is experiencing capability gaps, if any, given known affordability issues. To conduct this work, GAO analyzed the operational performance and test reports for all 4 newly fielded assets that the Coast Guard planned to test and the costs and capabilities of its major system acquisition portfolio. GAO also interviewed Coast Guard, DHS, and Navy officials.
What GAO Recommends
Congress should consider requiring the Coast Guard to include additional information in its Capital Investment Plan. In addition, the Secretary of DHS should clarify when minimum performance standards should be achieved, conduct C4ISR testing, and develop a long-term modernization plan. DHS concurred with the recommendations, but its position on developing a long-term plan does not fully address GAO's concerns as discussed in the report.
For more information, contact Michele Mackin at (202) 512-4841 or mackinm@gao.gov.Wed, 18 Jun 2014 13:00:00 -0400Letter ReportSequestration: Comprehensive and Updated Cost Savings Would Better Inform DOD Decision Makers If Future Civilian Furloughs Occur, June 17, 2014http://www.gao.gov/products/GAO-14-529
What GAO Found
In January 2013, the Department of Defense (DOD) instructed components to plan for the possibility of up to a 22-day administrative furlough of civilian personnel. On May 14, 2013, the Secretary of Defense issued a memorandum directing up to an 11-day furlough of most of DOD's civilians, and on August 6, 2013, reduced the number of furlough days to 6, resulting in a cost savings of about $1 billion from civilian pay, excluding implementation costs. DOD officials stated the decision to reduce the number of furlough days was due to DOD gaining greater flexibility from fund transfers and reprogrammings that occurred towards the end of the fiscal year. DOD identified categories of furlough exceptions for personnel including those assigned to a combat zone and those necessary to protect safety of life and property. Clarifying guidance was issued to help ensure that borrowed military personnel were not used to compensate for work resulting from the furlough, and to prohibit contracted support from being assigned or permitted to perform additional work or duties to compensate for workload or productivity loss resulting from the furlough. Ultimately, DOD furloughed 624,404 civilians and excepted 142,602 civilians for 6 days.
DOD developed its initial estimated cost savings for the furlough without excluding pay for those excepted from the furlough and did not update its estimate throughout the furlough period as more information became available, such as real-time cost savings and when subsequent decisions were made to reduce the number of furlough days. The initial estimated cost savings were calculated at $300 per person per furlough day, totaling about $2.1 billion for 11 furlough days. When DOD reduced the furlough from 11 to 6 days, the estimated cost savings were reduced by about $900 million. However, the estimated savings per person per day was not updated to reflect actual payroll reductions, in part because, according to DOD officials, there was only 1 week's worth of payroll data available at the time the decision was made. While officials stated that the estimated savings per person per day was not updated because they thought it was sufficient for their purposes and that the decision to reduce the number of furlough days was primarily based on funding received from transfers and reprogramming actions, the determination of exceptions was made 3 months earlier. If this initial estimate had been updated it may have provided more-comprehensive information for DOD officials to consider regarding the length of the furlough and DOD's cost-savings estimate. As DOD continues to face budgetary uncertainty, and in the event of a future furlough, having comprehensive and updated cost information may help better inform decision makers.
Officials at selected sites GAO visited noted a number of actions taken to prepare for the furlough and described impacts of the furlough, such as decline in morale, mission delays, and inconsistencies and clarification issues with the furlough guidance. However, attributing these impacts directly to the furlough is difficult given other factors, such as a civilian hiring freeze and pay freeze that may also have contributed to declining morale. For example, satisfaction with the organization had declined from 63 percent in 2010 to 55 percent in 2013. Furthermore, a longer term impact may result from DOD civilians filing over 32,000 appeals related to the administrative furlough in 2013, most of which have not yet been resolved.
Why GAO Did This Study
In March 2013, DOD's discretionary budget was reduced by $37 billion as a result of sequestration—across-the-board spending reductions to enforce certain budget policy goals. In response, the Secretary of Defense implemented an administrative furlough, among other things by placing most of DOD's civilian personnel in a temporary nonduty, nonpay status. An administrative furlough is a planned event by an agency to absorb reductions due to budget situations other than a lapse in appropriations.
GAO was mandated to review DOD's implementation of its administrative furlough. This report (1) examined how DOD implemented its furloughs and any reported cost savings, (2) examined the extent to which DOD utilized up-to-date cost-savings information in the planning and implementation of furloughs, and (3) identified any reported examples of impacts that resulted from the furloughs. GAO reviewed DOD furlough guidance, interviewed officials, and conducted visits at selected sites that were selected to represent different categories of furlough exceptions and potential sequestration impacts, among other things.
What GAO Recommends
GAO recommends that DOD update and utilize its furlough cost-savings information as it becomes available in the event that it decides to implement another administrative furlough in the future. DOD partially concurred. GAO continues to believe the findings and recommendation are valid, as discussed in the report.
For more information, contact Brenda S. Farrell at (202) 512-3604 or farrellb@gao.gov.Tue, 17 Jun 2014 13:00:00 -0400Letter ReportIRS 2015 Budget: Long-Term Strategy and Return on Investment Data Needed to Better Manage Budget Uncertainty and Set Priorities, June 12, 2014http://www.gao.gov/products/GAO-14-605
What GAO Found
Since fiscal year 2010, the Internal Revenue Service (IRS) budget has declined by about $900 million. As a result, funding is below fiscal year 2009 levels.
IRS Appropriations Fiscal Years 2009 through 2014 and Fiscal Year 2015 Requested Appropriation
Staffing has also declined by about 10,000 full-time equivalents since fiscal year 2010, and performance has been uneven. For example, between fiscal years 2009 and 2013, the percentage of callers seeking live assistance and receiving it fluctuated between 61 percent and 74 percent. IRS took some steps to address budget cuts, such as reduced travel and training.
IRS's strategic plan does not address managing budget uncertainty, although there are several indicators that funding will be constrained for the foreseeable future. For example, in May 2014, the Office of Management and Budget (OMB) generally required a 2 percent reduction in agencies' fiscal year 2016 budget submission. OMB guidance also requires agencies to develop strategies for operating in an uncertain budget environment. According to IRS, extensive senior leadership turnover has contributed to the lack of a long-term strategy. Without a strategy, IRS may not be able to operate effectively and efficiently in an uncertain budget environment.
For fiscal year 2015, IRS calculated projected return on investment (ROI) for most of its enforcement initiatives. However, due to limitations—such as estimating the indirect effect coverage has on voluntary compliance—IRS does not calculate actual ROI or use it for resource decisions. These limitations are important, which is why GAO recommended in 2012 that IRS explore developing such estimates. Given that these limitations could take time to address, GAO demonstrated how IRS could use existing ROI data to review disparities across different enforcement programs to inform resource allocation decisions. Comparing projected and actual ROI is consistent with OMB guidance. While not the only factor in making resource decisions, actual ROI could provide useful insights on the productivity of a program.
Why GAO Did This Study
The financing of the federal government depends largely upon the IRS's ability to collect taxes, including providing taxpayer services that make voluntary compliance easier and enforcing tax laws to ensure compliance with tax responsibilities. For fiscal year 2015, the President requested a $12.5 billion budget for IRS, a 10.5 percent increase over the fiscal year 2014 budget.
Because of the size of IRS's budget and the importance of its service and compliance programs for all taxpayers, GAO was asked to review the fiscal year 2015 budget request for IRS. (In April 2014, GAO reported interim information on IRS's budget.) Among other things, this report assesses IRS's (1) strategy to address budget cuts and (2) use of ROI analysis. To conduct this work, GAO reviewed the fiscal year 2015 budget justification, IRS and OMB budget guidance, and IRS workload and performance data from fiscal years 2009 to 2015. GAO also interviewed IRS officials and the National Taxpayer Advocate.
What GAO Recommends
GAO recommends that IRS (1) develop a long-term strategy to manage uncertain budgets, and (2) calculate actual ROI for implemented initiatives, compare actual ROI to projected ROI, and use the data to inform resource decisions. IRS agreed with GAO's recommendations, noting that it initiated a review of its base budget to ensure resources are aligned with its strategic plan and ROI is one of several factors relevant to making resource allocation decisions.
For more information, contact James R. McTigue, Jr. at (202) 512-9110 or mctiguej@gao.gov.Thu, 12 Jun 2014 13:00:00 -0400Letter ReportNuclear Weapons: Ten-Year Budget Estimates for Modernization Omit Key Efforts, and Assumptions and Limitations Are Not Fully Transparent, June 10, 2014http://www.gao.gov/products/GAO-14-373
What GAO Found
The Departments of Energy's (DOE) and Defense's (DOD) $263.8 billion, 10-year estimates in their report to Congress for sustaining and modernizing U.S. nuclear weapons capabilities are generally consistent with their funding plans through fiscal year 2018. However, GAO identified shortcomings with respect to the completeness of the budget estimates and the transparency of the assumptions and limitations that underlie the 10-year estimate. Specifically:
Nuclear stockpile and infrastructure: Based on GAO's recent review of DOE's long-term plans and estimates for sustaining and modernizing the nuclear enterprise, we found that DOE's $97.5 billion estimate in the report includes less funding than will be needed through fiscal year 2018 to meet program milestones for planned nuclear weapon life extensions, and through fiscal year 2023 to meet milestones for constructing key facilities.
Nuclear delivery systems: DOD's $125.5 billion estimate in the report does not include potential budget estimates for Air Force efforts to modernize intercontinental ballistic missiles or to develop a new bomber. Instead, DOD treated these efforts as zero-cost in the estimate. Consequently, DOD may be significantly underreporting its 10-year estimate, depending on the magnitude of the costs resulting from upcoming decisions about how to modernize these delivery systems.
Nuclear command, control, and communications (NC3): DOD's methodology for preparing its $40.8 billion estimate to sustain and modernize its system for assuring connectivity between the President and nuclear forces is not fully transparent because key assumptions and potential limitations are not documented in the report to Congress. As a result, Congress has a limited basis for understanding the estimate, or for comparing the estimates in one annual report to the next, as it assesses long-term affordability when allocating resources.
The report omits estimates for certain programs, such as the new bomber, and is not fully transparent in describing key assumptions and limitations for estimating nuclear command, control, and communications system funding, which limits its utility for budgetary planning. Key principles that GAO derived from federal budget guidance stress the importance of including all relevant funding estimates in the plan, as well as documenting methodological assumptions and potential limitations. However, DOD did not specifically direct the Air Force to include a range of potential budget estimates in the report for developing a new intercontinental missile or bomber, where a firm estimate was unavailable. DOD also did not direct that key assumptions and limitations be documented in the report for preparing its NC3 estimates. GAO reported in December 2013 that DOE's nuclear stockpile and infrastructure estimates did not include a range of preliminary budget estimates to account for known future expenses. GAO recommended that DOE include a range of potential budget estimates for preliminary projects and programs in future funding plans, and DOE generally agreed with this recommendation. Without a range of potential estimates and fully documented assumptions and limitations, the report is an incomplete tool for congressional oversight.
Why GAO Did This Study
DOE and DOD are undertaking an extensive effort to sustain and modernize the nuclear weapons stockpile, research and production infrastructure, delivery systems, and the nuclear command and control system. Completing this effort is expected to cost hundreds of billions of dollars over decades. Congress mandated the development of an annual report on the departments' plans and 10-year budget estimates for these efforts. Congress also mandated GAO to review the accuracy and completeness of the DOE and DOD report, with respect to the budget estimate contents and methodology.
This report addresses whether DOE's and DOD's 10-year budget estimates for sustaining and modernizing the nuclear deterrent are consistent with their funding plans, including whether the report provides complete information and a transparent methodology. GAO analyzed the DOE and DOD plans and estimates as of July 2013, and the DOE and DOD guidance and methodologies used to prepare their budget estimates.
What GAO Recommends
To improve the completeness and transparency of subsequent joint reports, GAO recommends that the Secretary of Defense direct DOD components to (1) include at least a range of potential 10-year budget estimates for projects and programs, based on preliminary cost information (this is consistent with a December 2013 recommendation GAO made to DOE); and (2) document assumptions and limitations affecting its NC3 funding estimates. DOD agreed with these recommendations.
For more information, contact John Pendleton at (202) 512-3489 or pendletonj@gao.gov, or David Trimble at (202) 512-3841 or trimbled@gao.gov.Tue, 10 Jun 2014 13:00:00 -0400Letter ReportManaging for Results: OMB Should Strengthen Reviews of Cross-Agency Goals, June 10, 2014http://www.gao.gov/products/GAO-14-526
What GAO Found
CAP Goal Progress. The GPRA Modernization Act of 2010 (GPRAMA) requires the Office of Management and Budget (OMB) to coordinate with agencies to: (1) establish outcome-oriented, federal government priority goals (known as cross-agency priority, or CAP, goals) with annual and quarterly performance targets and milestones; and (2) report quarterly on a single website now known as Performance.gov the results achieved for each CAP goal compared to the targets. In February 2012, OMB identified 14 interim CAP goals and subsequently published five quarterly updates on the status of the interim CAP goals on Performance.gov. While updates for eight of the goals included data that indicated performance towards an overall planned level of performance, only three also contained annual or quarterly targets that allowed for an assessment of interim progress. Updates for the other six goals did not report on progress towards a planned level of performance because the goals lacked either a quantitative target or the data needed to track progress. The updates on Performance.gov also listed planned activities and milestones contributing to each goal, but some did not include relevant information, including time frames for the completion of specific actions and the status of ongoing efforts. The incomplete information in the updates provided a limited basis for ensuring accountability for the achievement of targets and milestones.
OMB Quarterly Progress Reviews. GPRAMA also requires that OMB—with the support of the Performance Improvement Council (PIC)—review CAP goal progress quarterly with goal leaders. OMB instituted processes for reviewing progress on the goals each quarter, which involved the collection of data from goal leaders and the development of a memorandum for the OMB Director. However, the information included in these memorandums was not fully consistent with GPRAMA requirements. For example, GPRAMA requires OMB to identify strategies for improving the performance of goals at risk of not being met, but this was not consistently done. Without this information, OMB leadership and others may not be able to adequately track whether corrective actions are being taken, thereby limiting their ability to hold officials accountable for addressing identified risks and improving performance.
Leading Practices for Reviews. At the CAP-goal level, goal leaders for two CAP goals and one sub-goal instituted in-person progress reviews with officials from contributing agencies that were broadly consistent with the full range of leading practices for reviews, such as leadership involvement in reviews of progress on identified goals and milestones, and rigorous follow-up on issues identified through these reviews. In these cases, goal managers reported there were positive effects on performance, accountability, and collaboration. In contrast, review processes used by other goal leaders did not consistently reflect the full range of leading practices. Effective review processes consistently engage leaders and agency officials in efforts to identify and address performance deficiencies, and to ensure accountability for commitments. Thus, not using them may result in missed opportunities to hold meaningful performance discussions, ensure accountability and oversight, and drive performance improvement.
Why GAO Did This Study
The federal government faces complex, high-risk challenges, such as protecting our nation's critical information systems. Effectively managing these challenges is essential for national and economic security and public health and safety. However, responsibility for addressing these challenges often rests with multiple agencies. To effectively address them, shared goals and cross-agency collaboration are fundamental.
This report responds to GAO's mandate to evaluate the implementation of GPRAMA. It assesses (1) what is known about progress made towards the interim CAP goals; and (2) how, if at all, quarterly progress reviews reflected GPRAMA requirements and leading practices for reviews, as well as how reviews contributed to improved cross-agency performance and collaboration. To address these objectives, GAO analyzed CAP goal status updates and other documents from OMB and CAP goal progress-review meetings, and interviewed OMB staff and CAP goal representatives. GAO compared this information to GPRAMA requirements and to leading practices for performance reviews previously reported on by GAO.
What GAO Recommends
GAO is making seven recommendations to OMB to improve the reporting of performance information for CAP goals and ensure that CAP goal progress reviews meet GPRAMA requirements and reflect leading practices. OMB staff generally agreed to consider GAO's recommendations.
For more information, contact J. Christopher Mihm at (202) 512-6806 or mihmj@gao.gov.Tue, 10 Jun 2014 13:00:00 -0400Letter ReportDefense Headquarters: Guidance Needed to Transition U.S. Central Command's Costs to the Base Budget, June 09, 2014http://www.gao.gov/products/GAO-14-440
What GAO Found
GAO analysis of U.S. Central Command's (CENTCOM) and its service component commands' data shows considerable increases in the number of authorized positions over the past decade. The Department of Defense (DOD) is planning reductions, but the extent of these reductions has not been finalized. The number of authorized military and civilian positions at CENTCOM grew about 70 percent from almost 1,590 in fiscal year 2001 to almost 2,730 in fiscal year 2013, primarily driven by increases in the number of positions within CENTCOM's intelligence directorate and its theater special operations command. However, focusing solely on trends in authorized military and civilian positions provides an incomplete picture of the personnel dedicated to CENTCOM because the command relies heavily on temporary personnel and contractors to augment its headquarters. GAO analysis of CENTCOM's data found that the command headquarters had about 550 temporary personnel, who officials stated are primarily responsible for supporting the command's operations in Afghanistan and do not fill any permanent authorized positions, and 1,100 contractor personnel in fiscal year 2013. Additionally, GAO found that authorized military and civilian positions at CENTCOM's Army and Marine Corps service component commands had also increased. In response to the Secretary of Defense's direction to reduce headquarters spending, DOD is planning to decrease personnel at CENTCOM and its service component command headquarters. For example, CENTCOM is planning to reduce its total authorized positions by 353 positions from fiscal years 2015 through 2019.
As DOD's headquarters reduction efforts continue and contingency operations in Afghanistan wind down, the department has recognized that CENTCOM and its service components' have enduring headquarters costs that are expected to continue after ongoing operations end, but the majority of the costs to operate and support CENTCOM, two of its service component commands, and its theater special operations command headquarters are funded with overseas contingency operations appropriations. For example, CENTCOM's Marine Corps service component command funded $34 million out of a total of $42 million in headquarters costs in fiscal year 2013 with overseas contingency operations appropriations. CENTCOM and its components have determined some of these costs are enduring and expected to continue after the end of contingency operations, such as for Isa Air Base in Bahrain, but the military services have not transitioned or developed a time frame to transition these enduring costs to DOD's base budget. DOD's base budget contains the department's priorities for allocating resources. DOD officials stated that the department has not issued guidance that addresses how to fund these costs or established a time frame for when to transition them from DOD's overseas contingency operations budget to its base budget because DOD is waiting on decisions about future military involvement in Afghanistan. Officials also stated that the constrained fiscal environment has contributed to the department's reluctance to transition overseas contingency operations costs to DOD's base budget. However, without guidance that addresses how to pay for enduring headquarters costs funded by overseas contingency operations appropriations and a time frame to transition these costs to DOD's base budget, DOD may not be able to fully resource these activities once the funding decreases or ceases.
Why GAO Did This Study
CENTCOM is one of six geographic combatant commands that DOD operates to perform its military missions. CENTCOM's geographic region is composed of countries located in the Middle East, North Africa, and Central and South Asia. CENTCOM and each of its service component commands' headquarters are composed of military and civilian personnel and receive millions of dollars in funding each year to accomplish assigned missions. GAO was mandated to review CENTCOM's resources.
This report (1) identifies trends in personnel devoted to CENTCOM and its service component commands since fiscal year 2001 and any steps DOD is planning to take for reducing personnel in the future, and (2) assesses how DOD funds CENTCOM and its service component commands' headquarters costs. GAO analyzed data on authorized positions, temporary personnel, and headquarters costs for CENTCOM and its service component commands from fiscal years 2001 through 2013. GAO also interviewed DOD officials about commands' resources and plans for funding headquarters costs.
What GAO Recommends
GAO recommends that DOD develop guidance for transitioning costs funded by overseas contingency operations appropriations to DOD's base budget. DOD partially agreed stating that the transition's time frame depends on enduring missions and the criteria for future budgets. GAO continues to believe the recommendation is valid, as discussed in the report.
For more information, contact John Pendleton at (202) 512-3489 or pendletonj@gao.gov.Mon, 09 Jun 2014 13:00:00 -0400Letter Report